Quarterly outlook and issuance calendar fourth quarter 2020

News item | 16-09-2020 | 09:30

The Quarterly outlook presents the latest developments concerning the Dutch economy, the budgetary situation and the financing of the State debt. In addition, this Quarterly outlook includes a “save the date” for the DSTA’s annual Outlook event in December.

Funding need

On 15 September 2020 the government presented the 2021 Budget Memorandum, including an overall update of the budgetary and economic outlook. Based on the new figures the funding need for the Dutch State now stands at € 110.7 bn.

Although still considerable, the funding need is significantly lower than the previous estimate given at the end of June (€ 138.8 bn). The key reason for the difference is that the cash deficit has improved from a forecasted € 95.1 bn at the end of June to € 66.9 bn. This in turn can be explained by the fact that the GDP decline is now less than previously predicted and that the budgetary impact of the corona support measures is also less than anticipated before.

Estimated funding need 2020	€ bn
Capital market redemptions 2020	29.9
Money market ultimo 2019 (excl. cash collateral)	14.3
Increase in cash collateral (until end of August)	-0.4
Cash deficit 2020	66.9
Buy-backs DSLs (until end of Augusts)	-
Total	110.7

A first forecast of the funding need for 2021 will be presented in the Annual outlook to be published on 11 December. Due to the financial and budgetary uncertainties surrounding the corona crisis, no such estimate will be given in this Quarterly outlook.

Call on capital and money market

The Dutch State Treasury Agency (DSTA) has met the higher funding need first and foremost by stepping up money market funding. When it became more clear that the higher funding need also had a more structural nature, capital market funding was also increased, from a range of € 21-26 bn announced at the start of the year, to a minimum of € 40 bn announced at the end of June. By gradually shifting money market funding to capital market funding the DSTA also acts in accordance with its goal to extend the average maturity of the portfolio.

At this stage the DSTA expects to issue around € 45 bn on the capital market this year. So far a nominal amount of € 31.3 bn has been raised, thus covering about 70% of the expected total issuance volume.

DSL issuance calendar fourth quarter 2020

Three auctions have been scheduled for Dutch State Loans (DSLs) in the fourth quarter. The 7-year DSL launched earlier this year will be reopened on 13 October and again on 24 November, as the DSTA is committed to bring the outstanding issuance volume of this bond towards approximately € 15 bn within twelve months of its launch. On 10 November an existing DSL will be tapped, of which the maturity will be decided upon after consultation with Primary Dealers. In addition, on 22 September, before the start of the new quarter, the DSTA will launch a new 30-year bond, as previously announced.

In case of unforeseen changes in the funding need the DSTA reserves the right to add an auction – on the fourth Tuesday in October or the first Tuesday in December – or, alternatively, alter or remove an auction from the DSL calendar. If changes need to be made to the issuance calendar this will be announced in a timely manner through a press release.

Auction date	Details	Target volume (€ bn)
13 October	Reopening DSL 0.00% 15 January 2027	1.5 – 2.5
10 November	Reopening of existing DSL	To be determined
24 November	Reopening DSL 0.00% 15 January 2027	1.5 – 2.5

Note: Announcement of auction details will be in due time, at the latest on the Wednesday prior to the auction date (t-6).

DTC issuance calendar fourth quarter 2020

Due to the considerable decline in the funding need from the last estimate at the end of June the DSTA has decided not to launch new 12-month DTC-programmes in the fourth quarter and only tap existing programmes every other week instead of every week. As a result, DTC auctions will now again be held on the first and third Monday of the month.

For similar reasons the DSTA has also decided to remove the 12-month DTC-programme, that would otherwise be launched on 28 September in the present quarter, from the DTC calendar. The DSTA also reserves the right to add or remove DTC-programmes or reopenings in the fourth quarter if circumstances change.

Auction date	Settlement date	Programme 1	Progamme 2
05/10/2020	07/10/2020	28 January 2021	29 July 2021
12/10/2020	14/10/2020
19/10/2020	21/10/2020	29 April 2021
26/10/2020	28/10/2020
02/11/2020	04/11/2020	25 February 2021	30 August 2021
09/11/2020	11/11/2020
16/11/2020	18/11/2020	30 March 2021
23/11/2020	25/11/2020
30/11/2020	02/12/2020
07/12/2020	09/12/2020	28 May 2021
14/12/2020	16/12/2020

Note: announcement of auction details is on the Wednesday prior to the auction date (t-5).